UNITED STATES DISTRICT COURTSOUTHERN DISTRICT OF FLORIDA

MIAMI DIVISION

Case No. 1:1O-cv-23235IHOEVELER

DAVID KARDONICK, JOHN DAVID, andMICHAEL CLEMINS, individually and onbehalf of all others similarly situated and thegeneral public,

V.

Plaintiffs,

JPMORGAN CHASE & CO. and CHASEBANK USA, N.A.

Defendants.

CHASE’S REPLY MEMORANDUM IN SUPPORTOF ITS MOTION FOR SHOW CAUSE ORDER

Robert D. WickAndrew SoukupCOVINGTON & BURLING LLPAttorneys for Defendants1201 Pennsylvania Ave. N.W.Washington, D.C. 20004Telephone: (202) 662-6000Facsimile: (202) 778-5487

Dennis M. CampbellCAMPBELL LAW FIRM PLLCAttorney for Defendants95 Merrick WaySuite 514Coral Gables, Florida 33134Telephone: (305) 444-6040Facsimile: (305) 444-6041

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TABLE OF CONTENTS

TABLE OF AUTHORITIES ii

INTRODUCTION 1

ARGUMENT 2

I. RESPONDENTS HAVE VIOLATED THIS COURT’S INJUNCTION 2

A. The Consumer Relief Claims Were Filed “On Behalf Of’ Settlement ClassMembers 2

B. The Consumer Relief Claims Were Released By The Settlement 3

C. The Cases Cited By Respondents Are Inapplicable 7

II. GOLOMB & HONIK’S ADDITIONAL DEFENSES FAIL 10

A. Chase Did Not Waive Its Right To Enforce The Injunction 10

B. The Court’s Injunction Does Not Interfere With Golomb & Honik’sEthical Obligations 13

III. BARON & BUDD’S ADDITIONAL DEFENSES FAIL 13

A. The Court Has Personal Jurisdiction Over Baron & Budd 13

B. Sovereign immunity Does Not Bar The Court From Enforcing TheInjunction 14

C. Due Process Does Not Bar The Court From Enforcing The Injunction 15

D. The Court That Enters An injunction Has Jurisdiction To Enforce It 16

IV. THE COURT SHOULD ENTER A SHOW CAUSE ORDER REQUIRINGRESPONDENTS TO APPEAR 17

CONCLUSION 18

TABLE OF AUTHORITIES

CASES

Air Prods. & Chems., Inc. v. Louisiana Land & Exploration Co.,867 F.2d 1376(llthCir. 1989) 10

Alderwoods’ Group, Inc. v. Garcia,682 F.3d 958 (llthCir. 2012) 14,16,17

Burr & Forman v. Blair,470 F.3d 1019(11th Cir. 2006) 13

Citibank NA. v. Data Lease Fin. Corp.,904 F.2d 1498 (11th Cir. 1990) 8

Citizensfor Lawful & Effective Attendance Policies v. Sequoia Union High Sch. Dist.,No. C 87-3204 MMC, 1998 WL 305513 (N.D. Cal. June 4, 1998) 12

Dade Cnty. v. Rohr Indus., Inc.,826 F.2d983 (llthCir. 1987) 10

Drywall Tapers & Pointers ofGreater N Y, Local 1974 v. Local 530 ofthe OperativePlasters’ & Cement Masons’ mt ‘1 Ass ‘n,Nos. 93-CV-0154, 98-CV-7076, 2002 WL 31641597 (E.D.N.Y. Nov. 19, 2002) 12

Edwards v. Wallace Cmly. Coll.,49F.3d 1517 (llthCir. 1995) 7

EEOC v. Jefferson Dental Clinics,478 F.3d 690 (5th Cir. 2007) 10

EEOC v. US. Steel Corp.,921 F.2d 489 (3d Cir. 1990) 9

EEOC v. Waffle House, Inc534 U.S. 279 (2002) 9. 10

Esslinger v. HSBC Bank USA. inc.,No. 10-cv-2313-BMS (E.D. Pa.) 5, 11

FTC v. AMREP Corp.,705 F. Supp. 119 (S.D.N.Y. 1988) 5

FTC i’. Leshin.618F.3d1221(llthCir.2010) 15

11

Hawaii v. Honolulu Univ. ofArts, Sciences & Humanities,135 P.3d 113 (Haw. 2006) 3

Henson v. Ciba-Geigy Corp.,261 F.3d 1065 (11th Cir. 2001) 13

Herman v. South Carolina Nat ‘1 Bank,140 F.3d 1413 (11th Cir. 1998) 8, 9

Howard Johnson Co., inc. v. Khimani,892F.2d1512(llthCir. 1990) 18

in re Baldwin- United Corp.,770 F.2d 328 (2d Cir. 1985) 4, 6, 8, 15

In re Prudential Ins. Co. ofAm. Sales Practice Litig.,261 F.3d 355 (3d Cir. 2001) 4

Irvine v. Cargill Investor Servs., Inc..799 F.2d 1461 (11th Cir. 1986) ii

Kersey v. Fernald,911 So. 2d 994 (Miss. Ct. App. 2005) 3

Kokkonen v. Guardian Life Ins. Co. ofAm.,511 U.S. 375 (1994) 16

LG Display Co., Ltd. v. Madigan,665 F.3d 768 (7th Cir. 2011) 7, 8

Louisiana ex rel. Caldwell v. Allstate Ins. Co.,536 F.3d 418 (5th Cir. 2008) 8

McGuffin v. Springfield Housing Auth.,662 F. Supp. 1546 (C.D. Iii. 1987) 12

Nevada v. Bank ofAm. Corp.,672F.3d661(9thCir.2012).. ...,. .... 7

New York v, Gen. Motors Corp.,547 F. Supp, 703 (S.D.N.Y, 1982) 7. 16. 17

Pac. Shinfu Tech. Co. v. Pinnacle Research inst., Inc..No. C-00-2 1034 RMW, 2008 WL 4669906 (N.D. Cal. Oct. 22, 2008) 12

People ex rd. Spitzer v. Applied Card Sys., Inc..834 N.Y.S. 2d 558 (N.Y. App. Div. 2007) 10

111

People ex re Spitzer v. Applied Card Sys., Inc.,894 N.E.2d I (N.Y. 2008) 15

Reynolds v. Roberts,207 F.3d 1288 (11th Cir. 2000) 17

Rosario v. Am. Corrective Counseling Servs., Inc..506 F.3d 1039 (11th Cir. 2007) 14

Sandpiper Village Condominium Ass ‘n, Inc. v. Louisiana-Pacflc Corp.,428 F.3d 831 (9th Cir. 2005) 17

Sec y ofLabor v. Fitzsimmons,805 F.2d 682 (7th Cir. 1986) 9

Spinelli v. Capital One Bank (USA) N.A.,No. 8-cv..00132, 2012 WL 3609028 (M.D. Fla. Aug. 22, 2012) 8, 9, 17

Tradigrain, Inc. v. Mississippi State Port Auth.,701 F.2d 1131 (5thCir. 1983) 7

United States v. Katz,No. 10 Civ. 3335, 2011 WL2175787(S.D.N.Y,June2,2011) 9

West Virginia cx rd. McGraw v. C VS Pharmacy, Inc.,646 F.3d 169 (4th Cir. 2011) 7

West Virginia ex rel. McGraw v. JPMorgan Chase & Co.,842 F. Supp. 2d 984 (S.D. W. Va. 2012) 7, 8

West Virginia ex ret. McGraw v. Scott Runyan Pontiac,461 S.E.2d 516 (W. Va. 1995) 3

Will v. Mich. Dep ‘t ofState Police,491 U.S. 58 (1989) 7

STATUTES AND OTHER AUTHoRITiES

Haw. Rev. Stat. § 487-14 3

Miss. Code § 75-24-11 3

W. Va. Code § 46A-7- 111(1) 3. 5

RESTATEMENT (THIRD) OF REsTITUTION § 1 cmt 4

ABA Model Rules of Professional Conduct, Rule 5,6(b) 12, 13

iv

INTRODUCTION

This Court’s order enjoins settlement class members and anyone “actually or purportedly

acting on behalf of’ class members from reasserting settled claims. Respondents Golomb &

Honik and Baron & Budd nevertheless have reasserted claims substantially identical to the

claims at issue in the settled actions on behalf of the very same consumers who released their

claims as part of the settlement. Respondents thereby violated the Court’s injunction and

deprived Chase of the finality that the settlement was intended to secure. None of the defenses

that Respondents offer for this conduct withstand scrutiny.

Respondents argue that the claims asserted in the state attorney general actions are

asserted in the “name” of the state and are not among the claims released by the settlement, but

this argument overlooks the fact that the claims at issue are being asserted on behalf of private

consumers. Where, as here, a state attorney general seeks relief as a representative of private

consumers, the attorney general stands in privity with those consumers and is bound by any

settlements entered into by those consumers. Respondents’ contrary argument is rejected by on-

point decisions of the Second, Third, Fifth and Ninth Circuits as well as several district courts.

As these decisions recognize, any other result would expose settling defendants to precisely the

type of double-dipping and duplicative litigation that Respondents have initiated here.

Respondent Baron & Budd also argues that it need not comply with this Court’s

injunction because it is entitled to the same immunities and defenses that allegedly apply to the

state attorneys general. (B&B Opp. at 1. 14.) It further asserts that “Chase concedes the Court’s

injunction does not apply” to attorneys general. (Id) Baron & Budd is mistaken on both counts.

As an initial matter, Baron & Budd made up Chase’s supposed ‘concession” out of thin

air. Chase argued at length in its opening memorandum that the attorneys general are subject to

this Court’s injunction. (Chase’s Motion for Show Cause Order and Supporting Memorandum

of Law (“Mem.”) at 14-18.) Furthermore. if the attorneys general do not voluntarily conform

their conduct to the injunction following the adjudication of this motion, the Court may

eventually have to render a decision on whether the attorneys general are bound. For now,

however, the only question before the Court is whether Respondents Baron & Budd and Golomb

& Honik are subject to the Court’s injunction. The answer is clear: as private law firms that

practice before this Court, both firms must abide by this Court’s order.

For these reasons, as more fully set forth below, a show cause order should issue.

ARGUMENT

1. RESPONDENTS HAVE VIOLATED THIS COURT’S INJUNCTION.

A. The Consumer Relief Claims Were Filed “On Behalf Of” Settlement ClassMembers.

This Court’s injunction bars “any person actually or purportedly acting on behalf of any

Settlement Class Member(s)” from reasserting settled claims in any type of “representative”

action. (Dkt. # 384, 17.) Here, Respondents have plainly asserted claims “on behalf of”

settlement class members in representative actions. Indeed, Respondents’ own Complaints

acknowledge that they were filed “on behalf of the State and its citizens.” (Mem., Ex. A, ¶ 9; id.,

Ex. B, ¶ 8; see also id., Ex. C at 20.) Furthermore, each of the Complaints expressly seeks a

monetary recovery payable directly to settlement class members.’

Undaunted by the language of their own Complaints. Respondents argue that the

consumer claims asserted in the state attorney general actions were filed on behalf of state

attorneys general and not on behalf of consumers. (G&H Opp. at 4-5.) This is empty semantics.

1 See Mem. at 5-6; id., Ex. A at 21-22 (seeking “restitution” and recovery of “excesscharges” on behalf of affected West Virginia consumers); id., Ex. B at 22-23 (seeking“restitution ... for all Hawaii consumers injured by Defendants’ acts” and “restitution ... ofmonies obtained” as a result of alleged misconduct); Id. ¶ 88 (“consumers within the State shouldbe made whole”); id., Ex. C at 20 (seeking “restitution” to Mississippi consumers).

Although the Complaints were filed in the name of state attorneys general, the attorneys general

are serving as parens patriae representatives of consumers. As in any other representative

action, moreover, the actions were filed on behalf of both the representative parties (state

attorneys general) and the represented parties (individual consumers). That is why the

Complaints explicitly state that they were filed “on behalf of” state citizens and why they seek

monetary recoveries payable directly to those citizens.

State law reinforces these aspects of the Complaints by mandating that any recovery on

the relevant claims be paid to consumers. For example, the West Virginia Complaint seeks

recovery of “excess charges” paid by consumers under W. Va. Code § 46A-7-l 11(1), a statute

which expressly states that courts should “order the jdefendant] to refund to the consumer” any

excess charges proven by the state attorney general. Id. (emphasis added); see also West

Virginia ex rel. McGraw v. Scott Runyan Pontiac, 461 S.E.2d 516, 524 (W. Va. 1995)

(confirming that § 46A-7-111(i) claims are asserted “on behalf of’ consumers). Hawaii and

Mississippi law likewise require that the restitution sought by the attorneys general must be paid

to the affected consumers.2

B. The Consumer Relief Claims Were Released By The Settlement.

The consumer relief claims asserted in the state attorney general actions are substantively

identical to the claims asserted in the settled actions: they rely on the same factual allegations,

2 See, e.g.. Miss. Code § 75-24-il (a court may order “restitution[j as may be necessary torestore to any person in interest any monies ... which may have been acquired by means of anypractice prohibited by this chapter” (emphasis added)); Kersey v. Fernald, 911 So. 2d 994. 997(Miss. Ct. App. 2005) (holding that restitution seeks “to refund the money ... to the person towhom in good conscience it ought to belong”); Hawaii v. Honolulu Univ. of Arts, Sciences &Humanities, 135 P.3d 113, 124-25 (Raw. 2006) (under state law, a consumer who acceptsrestitution “‘shall bar recovery by the person of any other damages in any action on account ofthe same acts or practices against the person making restitution” (quoting Raw. Rev. Stat. §487-14)); see also RESTATEMENT (THIRD) OF REsTiTuTION § 1 cmt. e (restitution seeks to“restore[] something to someone, or restore[J someone to a previous position”).

they are brought under the same consumer protection statutes, and they are premised on the same

legal theories.3 Respondents nevertheless assert that these claims were not released by the

settlement because the claims supposedly belong to the states and not to consumers. (B&B Opp.

at 7.) Respondents further assert that the relevant state statutes deny consumers the right to settle

any claims that the state attorneys general are empowered to assert on their behalf. (G&H Opp.at 6-7; B&.B Opp. at 1011.) None of these arguments has merit.

Contrary to Respondents’ assertion, consumers do have the power to settle the claims at

issue here. Under settled law, a class action settlement may extinguish not only the particular

claims asserted in the lawsuit, but also any claims arising out of the same set of operative facts,

even if the claims “could not have been presented [] in the class action itself.” (Mem. at 9,

quoting In re Prudential Ins. Co. ofAm. Sales Practice Litig., 261 F.3d 355, 366 (3d Cir. 2001).)

Consistent with these principles, courts consistently hold that class action settlements may

release representative claims that state attorneys general otherwise could assert on behalf of

consumers. See Mem. at 9-10 & n. 4 (collecting cases); In re Baldwin-United Corp., 770 F.2d

328, 336 (2d Cir. 1985) (holding that a class action settlement may bar state attorney general

claims that are “derivative of the plaintiffs’ rights”); FTC v. AMREP Corp., 705 F. Supp. 119,

124-25 (S.D.N.Y. 1988) (rejecting the FTC’s argument that “private litigants cannot foreclose

the Government’s right to bring an independent action” because “private parties can release the

right to have an action brought on their behalf by a representative”); Esslinger v. HSBC Bank

USA, Inc., No. 10-cv-23 l3-BMS (E,D. Pa. Oct. 1, 2012) (attached hereto as Exhibit L) (rejecting

Mem. at 8; Dkt. #15 ¶ 101 (alleging violations of state consumer protection statutes); Id.¶ 112-19 (alleging unjust enrichment).

4

argument by Baron & Budd and Golomb & Honik that a class action settlement cannot

extinguish a state attorney general’s right to seek additional relief for settling consumers).4

Respondents counter that state attorney general actions are brought in the “name” of the

state (B&B Opp. at 10-11), but it makes no difference that the state is the named representative

in such actions. For example, class action litigation is filed in the name of a named plaintiff, but

the claims asserted on behalf of absent class members in such actions are not the property of the

named plaintiff; rather, such claims continue to belong to the absent class members. Likewise

here, the mere fact that attorneys general are authorized to file representative actions in the

“name” of the state does not divest consumers of ultimate ownership of these claims.

Respondents also assert that none of the relevant state statutes “authorizes a citizen to

bring, much less release, any of the claims that the State is authorized to bring.” (B&B Opp. at

10.) That assertion, however, is both erroneous and irrelevant. It is erroneous because the

relevant statutes do permit consumers to assert and release the types of claims available to state

attorneys general.5 It is irrelevant because although “there may be some laws not available to

In Esslinger, Baron & Budd and Golomb & Honik appeared for the attorneys general ofWest Virginia, Hawaii, and Mississippi and made exactly the same argument they are advancinghere: they asserted that a class action settlement could not bar the attorneys general from seekingadditional relief on behalf of settling consumers. The court rejected the argument, noting that asettlement would be an “illusory bargain” if the court could not “bar an individual from gettingpaid twice.” Ex. F, Tr. of Fairness Hearing, at 29, 48; see also id. at 43-47.

For example, the statute at issue in West Virginia provides:

If a consumer brings an action against a creditor to recover an excess charge or civilpenalty, an action by the attorney general to recover for the same excess charge shall bestayed while the consumer’s action is pending and shall be dismissed if the consumer’saction is dismissed with prejudice or results in a final judgment granting or denying theconsumer’s claim.

W. Va. Code § 46A-7-1 11(1). In other words, individual consumers may sue for the “sameexcess charges” that the attorney general seeks to recover for consumers in the West Virginiaaction, and such a suit will preclude any excess charge suit by the attorney general. Id. Similarprinciples apply in Hawaii and Mississippi. See supra at 3 n.2.

private plaintiffs that enable a given state to bring proceedings,” those laws do not cause the

restitution claims “to lose [their] representative character.” Baldwin-United, 770 F.2d at 341.

Put differently, it makes no difference if state attorneys general are authorized to sue on behalf of

consumers under different statutory provisions than the provisions that authorize suits by

consumers themselves. These separate statutory provisions do not divest consumers of the

ability to assert or settle the relevant claims; they merely authorize an additional party to sue on a

consumer’s behalf.

For all of these reasons, the consumer claims at issue here fall within the scope of the

claims released by the settlement. The undisputed intent of the settlement was to extinguish any

and all payment protection claims that class members were capable of releasing. The settlement

thus releases all claims “arising out of or in any way relating to” Chase’s payment protection

plans. (Dkt. #16, § II(jj).) It also specifies that released claims include, without limitation, any

right to “restitution” or to “any other type of equitable, legal or statutory relief’ available under

“the unfair and deceptive acts and practices statutes of any of the states.” (Id. § 11(n), (jj).)

Finally, the settlement reinforces this language by prohibiting class members and anyone acting

“on behalf of’ class members from reasserting settled claims “directly or indirectly” in any

“representative or other action.” (Id., Ex. C, ¶ 10.)

Taken as a whole, this language was plainly intended to foreclose the types of

representative claims that Respondents have asserted in the state attorney general actions.

indeed, Chase would not have settled the underlying class actions on any basis: it makes no

sense to pay millions of dollars for a class action release if virtually identical claims may then be

re-asserted on behalf of the very same class members - and even by the same class action

lawyers — as part of a state attorney general action.

6

Baron & Budd fares no better with its argument that state attorneys general are not

“persons” subject to this Court’s injunction. (B&B Opp. at 7.) Even if that were correct as to the

attorneys general (and it is not6), it would not change the fact that Baron & Budd and Golomb &

Honik are “persons” subject to the injunction. The injunction incorporates the settlement

agreement’s definition of “person,” which “includes, without limitation, natural persons, firms,

banks, corporations, and businesses.” (Dkt. #16, § 11(hh) (emphasis added).) As private “firms,”

Respondents unquestionably are “persons” subject to the Court’s injunction.

C. The Cases Cited By Respondents Are Inapplicable.

Respondents largely ignore an extended line of authority holding that government actors

are not entitled to circumvent private settlements by seeking additional relief on behalf of settling

parties. (See Mem. at 10 & n.4, 15 (collecting cases).) Instead of coming to grips with this

authority, Respondents rely on a separate line of authority interpreting the removal provisions of

the Class Action Fairness Act (“CAFA”). (G&H Opp. at 7-13; B&B Opp. at 8-l2.)

Respondents go so far as to assert that one of these CAFA removal cases “resolves the very issue

6 Even apart from the broad definition of “person” that appears in the Settlement, the stateattorneys general are “persons” in the context of claims for injunctive relief. See Will v. Mich.Dep’t of State Police, 491 U.S. 58, 71 n.10 (1989) (“[A] state official in his or her officialcapacity, when sued for injunctive relief, [is] a person under § 1983.”); Edwards v. WallaceCmiy. Coil., 49 F.3d 1517, 1524(11th Cir. 1995) (“[A] state official sued in his official capacityis a person for purposes of § 1983 when prospective relief, including injunctive relief, issought.”); see also Mem. at 14-17.

See, e.g., Nevada v. Bank ofAm. Corp., 672 F. 3d 661 (9th Cir, 2012); West Virginia exrd. McGraw v. CVS Pharmacy, Inc., 646 F.3d 169 (4th Cir. 2011); LG Display Co., Ltd. v.Madigan, 665 F.3d 768 (7th Cir. 2011); West Virginia ex rd. McGraw v. JPMorgan Chase &Co., 842 F. Supp. 2d 984 (S.D. W. Va. 2012). Respondents also cite other cases addressingwhether states were the real party in interest for purposes of determining diversity jurisdiction.See Tradigrain, Inc. v. Mississippi State Port Auth., 701 F.2d 1131(5th Cir. 1983) (holding thata state agency was an alter ego of the state for purposes of determining diversity jurisdiction);New York v. Gen. Motors Corp., 547 F. Supp. 703 (S.D.N.Y. 1982) (holding that the state wasthe real party in interest for purposes of determining diversity jurisdiction).

7

[that Chase] presents to this Court.” (B&B Opp. at 8, citing JPMorgan Chase & Co., 842 F.

Supp. 2d at 995-98.)

Respondents are fundamentally mistaken. The question here is whether this Court’s

injunction bars Respondents from seeking monetary relief “on behalf of” the same consumers

who released their claims as a part of the settlement. The cases cited by Respondents address an

entirely different question: whether state attorney general actions are removable to federal court

as “mass actions” under CAFA. In answering that question, the cited cases apply an arcane

analysis of whether consumers who stand to benefit from a representative action can be taken

into account for purposes of satisfying CAFA’s diversity of citizenship and numerosity

requirements. See, e.g., JPMorgan Chase & Co., 842 F. Supp. 2d at 99598.8 None of this has

anything to do with whether Respondents have asserted consumer relief claims “on behalf of’

members of the settlement class.

Although Respondents also cite a handful of cases from outside the removal context,

these cases miss the mark as well. As discussed in Chase’s opening memorandum, the decisions

in Spinelli v. Capital One Bank (USA) N.A., No. 8-cv-00132, 2012 WL 3609028 (M.D. Fla. Aug.

22, 2012), and Herman v. South Carolina Nat’l Bank, 140 F.3d 1413 (11th Cir. 1998), are easily

8 To determine whether attorneys general suits are removable under CAFA, some courtshave held that “the appropriate inquiry ... is to examine the whole complaint, and decide the realparty in interest based on the ‘essential nature and effect of the proceeding.” JPMorgan Chase& Co., 842 F. Supp. 2d at 997-98 (quoting LG Display Co., 665 F,3d at 773); but see Louisianacx rd. Caidwell v. Allstate Ins. Co., 536 F.3d 41 8, 429 (5th Cir. 2008). Although the “wholecomplaint” analysis may be appropriate for determining whether a suit is a CAFA “class action,”assessing the scope of a settlement agreement and release is inherently claim specific andrequires a claim-by-claim analysis. See, e.g., Citibank N.A. v. Data Lease Fin. Corp., 904 F.2d1498. 1501 (11th Cir. 1990) (“When claim preclusion does not apply to bar an entire claim or setof claims, the doctrine of collateral estoppel, or issue preclusion, may still prevent the relitigationof particular issues which were actually litigated and decided in a prior suit.”); Baldwin-United,770 F.2d at 336 (distinguishing between state attorney general claims asserted on behalf of thestate and “state law claims derivative of the plaintiffs’ rights”).

8

distinguished from this action. (Mem. at 18-19.) Most of the other cases cited by Respondents

are equally inapposite.9 Finally, Respondents’ citation to EEOC v. W,fjle House, Inc., 534 U.s.

279 (2002), actually undermines their position.

Waffle House held that an arbitration clause contained in an individual employment

contract did not require the EEOC to arbitrate its claims relating to the individual’s employment.

Id. at 283-84. Significantly, the Court distinguished this arbitration holding from the situation

presented here, noting that if an employee “had accepted a monetary settlement, any recovery by

the EEOC would be limited accordingly.” Id. at 296-97. The Court supported that statement

with a citation to EEOC v. US. Steel Corp., 921 F.2d 489, 495 (3d Cir. 1990), a decision that

squarely rejects Respondents’ arguments.

In US. Steel Corp., the EEOC argued that an employee’s private settlement could not bar

the EEOC from seeking additional restitution to the employee because the government allegedly

had “a broader independent public interest different from that of an individual grievant.” Id. at

496. The Third Circuit disagreed, holding that the EEOC had “fail[ed] to distinguish between

[its] role in protecting the public interest and its role in vindicating specific private claims.” Id.

The court concluded that the “doctrine of representative claim preclusion” ordinarily precludes

governmental actors from seeking additional relief on behalf of private parties who have already

entered into private settlements. Id. Likewise here, the state attorneys general were properly

Spinelli, Herman, and the other cases cited by Respondents typically involve overbroadattempts to bar a government official from asserting any claims at all as a result of a class actionsettlement. For example, in Sec y of Labor v. Fitzsimmons, 805 F.2d 682 (7th Cir. 1986), thecourt noted that a settlement agreement did not bar the Secretary of Labor from bringing anenforcement action under ERISA because “the Secretary and the Secretary alone may bring asuit to collect a civil penalty.” Id at 691. Likewise, in tjited States v. Katz, No. 10 Civ. 3335,2011 WL 2175787 (S.D.N.Y. June 2, 2011), the court noted that private litigation could not barthe government from seeking “civil penalties in court ‘to vindicate the public interest’ andinjunctive [relief for i]ndividuals who flout the Act.” id at *6. Here, Chase seeks only to barRespondents from seeking monetary relief payable to settlement class members.

9

barred from seeking additional relief on behalf of settling class members. See, e.g., Mem. at 10

& n.4, 15 (collecting cases); EEOC v. Jeffrrson Dental Clinics, 478 F.3d 690, 699 (5th Cir.

2007) (under Waffle House, “[tjhe EEOC’s public interest does not justify giving the plaintiffs

two chances to receive make-whole relief”); People cx rd. Spitzer v. Applied Card Sys., Inc.,

834 N.Y.S. 2d 558 (N.Y. App. Div. 2007) (Waffle House “distinguished claims for injunctive

relief, where the regulatory body scrvcs in a distinct, nonrepresentative capacity, and those for

monetary damages on behalf of individuals who have already been compensated.”).

II. GOLOMB & HONIK’S ADDITIONAL DEFENSES FAIL.

Golomb & Honik properly refrains from arguing that lack of personal jurisdiction, lack of

due process, or sovereign immunity would provide it with a defense to a violation of this Court’s

injunction. Any such argument would be untenable given the firm’s role as class counsel in the

underlying action. (Mem. at 5.) Golomb & Honik does assert, however, that Chase has waived

the right to enforce the injunction and that the injunction threatens to interfere with its ethical

responsibilities. Neither of these assertions has merit.

A. Chase Did Not Waive Its Right To Enforce The Injunction.

Golomb & Honik argues that Chase waived the right to enforce this Court’s injunction,

but it fails to meet the standard required for waiver. Waiver requires an “intention to relinquish

[the] right, privilege, advantage, or benefit” in question. Dade Cnty. v, Rohr Indus., Inc.. 826

F,2d 983, 990 (11th Cir, 1987) (emphasis added); see also Air Prods. & Chems., Inc. v.

Louisiana Land& Exploraiion Co., 867 F.2d 1376. 1379 (11th Cir. 1989) (burden is on the party

asserting waiver to “make out a clear case” of “an intentional or voluntary relinquishment of a

known right”). Here, far from intentionally relinquishing its right to insist on compliance with

this Court’s injunction, Chase actively asserted that right as soon as Respondents initiated

substantive litigation of their consumer relief claims.

10

Golomb & Honik’s waiver argument rests on an inaccurate factual premise: that Chase

“actively litigated” the attorney general actions for over a year without asserting the injunction as

a defense. (G&H Opp. at 14.) The actual facts are as follows:

• The Hawaii and Mississippi actions were not even filed until April and July 2012,respectively, and no substantive litigation has yet occurred in either action. Chase hasremoved both actions to federal court; the plaintiffs have moved for remand; and briefingon the remand motions is not yet complete in either court. (Second Declaration of RobertD. Wick (“Second Wick Dccl.”) ¶ 6-11.)

• in the West Virginia action, the questions of removal and remand were not settled untilFebruary 2012, and the attorney general first attempted to serve discovery in April 2012.Chase promptly responded to these discovery requests by asserting this Court’sinjunction as a bar to any attempt to litigate consumer relief claims. (Id. ¶J 2-4.)

• Chase followed up on April 17, 2012 by asking the attorney general to enter into avoluntary stipulation confirming that he would abide by this Court’s injunction. (Id12-13.) Opposing counsel never provided a clear response. (Id. ¶ 13.)

• Chase continued to hold out hope that Respondents would voluntarily agree to abide bythe Court’s injunction until August of this year, at which point Respondents made clearthat they were unlikely to do so in a filing submitted in related litigation. See Esslinger,No. l0-cv-2313-BMS (Dkts. #84, 93, 94).

• After reviewing the position taken by Respondents in the related litigation, Chase draftedand filed the instant motion for a show cause order. (Second Wick Decl. ¶ 15.)

• Finally, although Golomb & Honik asserts that Chase did not object to its representationof West Virginia “between the filing of the West Virginia action and the Final ApprovalOrder in this case,” it neglects to inform the Court that (a) Chase was not served with theComplaint in that action until September 1, 2011, and (b) at the final approval hearingthat took place less than ten days later, Golomb & Honik informed Chase’s counsel that itwould be withdrawing from the West Virginia action. (Id. ¶J 2, 5)10

In sum, in the only case in which the parties have engaged in substantive litigation — the

West Virginia action — Chase asserted the injunction as a bar to consumer relief claims as soon

as the plaintiff served discovery. Golomb & Honik’s waiver argument thus boils down to an

assertion that Chase waived its rights merely by waiting until a plaintiff actually attempted to

Golomb & Honik withdrew from the West Virginia action on October 6. 2012.

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litigate a consumer relief claim before raising the injunction as a defense. This falls far short of

anything approaching an “intentional” surrender of the right to enforce the injunction. See Irvine

v. C’argill Investor Servs., Inc., 799 F.2d 1461, 1463-64 (11th Cir. 1986) (“mere delay” is

insufficient to demonstrate “an intention to relinquish [a] right, privilege, advantage or benefit”).

Furthermore, even if it were true that Chase had “actively litigated” the attorney general

actions for over a year before invoking the injunction, that would not be sufficient to establish a

waiver. See, e.g., Pac. Shinfu Tech. Co. v. Pinnacle Research Inst., Inc., No. C-00-2 1034 RMW,

2008 WL 4669906, at *4 (N.D. Cal. Oct. 22, 2008) (holding that a “four-year delay [in asserting

contempt] is not unreasonable”); Drywall Tapers & Pointers of Greater N. Y, Local 1974 v.

Local 530 of the Operative Plasters’ & Cement Masons’ Int’l Ass ‘n, Nos. 93-CV-01 54, 98-CV-

7076, 2002 WL 31641597, at *43 (E.D.N.Y. Nov. 19, 2002) (holding that a delay of over two

years did not prevent a party from filing a contempt proceeding); Citizens for Lawful & Effective

Attendance Policies v. Sequoia Union High Sch. Dist., No. C 87-3204 MMC. 1998 WL 305513,

at *6 (N.D. Cal. June 4, 1998) (holding that “any delay in initiating contempt proceedings was

reasonable” where the moving party voices an objection shortly after the violation occurs);

McGuffin v. Springfield Housing Auth., 662 F. Supp. 1546, 1550 (C.D. Ill. 1987) (holding that a

delay of two years did not prevent a party from initiating a civil contempt proceeding for

violating a consent decree).”

11 The cases Golomb & Honik cites are entirely irrelevant to the waiver of a civil contemptclaim, in Nat ‘1 Union Fire Ins. Co. of Pittsburgh v. Beta Constr. LLC, the court noted that aparty could waive a personal jurisdiction defense by failing to raise it in a motion to dismiss orentering an appearance without objecting to personal jurisdiction. No. 8:l0-cv-1541, 2010 WL4316573, at *1 (M.D. Fla. Oct. 26, 2010). in Williams v. Marriott Corp., the court held that “aparty waives any objection to a court’s response to juror misconduct unless it makes a timelyobjection.” 864 F. Supp. 1168, 1173 (M.D. Fla. 1994). Finally, in Townhouses of HighlandBeach Condominium Ass ‘n, Inc. v. QBE Ins. Corp., the court held that a party waived a defenseby failing to raise it in a motion to dismiss. 504 F. Supp. 2d 1307. 1312 (S.D. Fla. 2007).

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B. The Court’s Injunction Does Not Interfere With Golomb & Honik’s EthicalObligations.

Golomb & Honik next argues that enforcing the injunction against it would violate Rule

5.6(b) of the ABA Model Rules of Professional Conduct, which “prohibits a lawyer from

agreeing not to represent other persons in connection with settling a claim on behalf of a client.”

Model Rules of Prof’l Conduct 5.6 cmt. b (2012) (emphasis added). The flaw in this argument is

obvious: the Model Rule prohibits surrendering the right to represent other parties as part of a

settlement; it does not prohibit counsel from giving up the right to assert duplicative claims on

behalf of settling parties. Id.

Where, as here, lawyers assert duplicative claims on behalf of settling parties, courts are

free to sanction the lawyers for engaging in duplicative litigation. See Henson v. Ciba-Geigy

Corp., 261 F.3d 1065, 1068 (11th Cir. 2001) (affirming assessment of attorneys’ fees against

plaintiffs’ counsel for “efforts to undermine” federal class action settlement by prosecuting

related claims in state court). Courts are likewise free to enjoin state attorneys general and their

counsel from asserting duplicative claims on behalf of consumers. (See Mem. at 9-10, 14-17.)

III. BARON & BUDD’S ADDITIONAL DEFENSES FAIL.

Baron & Budd argues that it did not receive contemporaneous notice of the settlement,

but it does not deny — nor could it — that it has long had notice of this Court’s injunction.’2 It

offers no valid defense to its ongoing violation of that injunction.

A. The Court Has Personal Jurisdiction Over Baron & Budd.

Baron & Budd argues that it is not subject to this Court’s personal jurisdiction because it

was not a party to the underlying action (B&B Opp. at 5-6, 15-16). but its absence from that

12 Baron & Budd’s opposition to the instant motion confirms that it is now aware of theinjunction, and that is enough for purposes of this motion. In any event, Chase communicatedwith Baron & Budd about the injunction several months ago. (Second Wick Dccl. ¶ 12-13.)

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action is irrelevant. Under Eleventh Circuit law, this Court has jurisdiction over anyone in a

position to frustrate its injunction, regardless of whether they were a party to the original action.

See Burr & Forman v. Blair, 470 F.3d 1019, 1026-27 (11th Cir. 2006). In fact, as explained in

Chase’s opening brief, a district court’s power to enforce its own injunction “extends to the

whole world, to any person who comes in contact with” the injunction. (Mem. at 16-17, quoting

Alderwoods Group, Inc. v. Garcia, 682 F.3d 958, 971-72 (11th Cir. 2012).) This Court thus has

jurisdiction over both the attorneys general and Respondents because both of them have violated

the Court’s injunction.

This Court also has two additional sources of jurisdiction over Baron & Budd. First, this

Court unquestionably has jurisdiction over the settlement class members, and this jurisdiction

extends to Baron & Budd to the extent that the firm seeks relief on behalf of those class

members. (Mem. at 14-16.) Second, this Court has jurisdiction over Baron & Budd because the

firm is a frequent practitioner before the Court. (Id. at 12-13 & n.5.) Indeed, Baron & Budd

lawyers appear on a regular basis in ongoing class action litigation before Judge King, and they

doubtless intend to apply to Judge King for a multi-million-dollar attorneys’ fee award at the

conclusion of the litigation. Baron & Budd cannot selectively avail itself of the right to practice

before this Court while simultaneously ignoring this Court’s injunctions. (Id. at 11-12.)

B. Sovereign Immunity Does Not Bar The Court From Enforcing TheInjunction.

Baron & Budd’s sovereign immunity defense fails as well. Baron & Budd does not

dispute that it receives no funding from the states, that its lawyers are not state employees, and

that a civil contempt sanction would not be paid from a state treasury. (Id at 13-14.) These facts

are fatal to its sovereign immunity defense. (Id.) Because a judgment against Baron & Budd

“would not impose any liability upon the [statesi.” the Eleventh Amendment confers no

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immunity from a civil contempt sanction. Rosario v. Am. Corrective Counseling Servs., Inc.,

506 F.3d 1039, 1046 (11th Cir. 2007).

Furthermore, even the state attorneys general would not be able to establish a sovereign

immunity defense to a violation of this Court’s injunction. As explained in Chase’s opening

brief, state officials stand in the shoes of settlement class members where, as here, they seek

monetary relief on behalf of the class members. (Mem. at 15-16.) Thus,just as settlement class

members could not assert sovereign immunity as a defense to a violation of this Court’s

injunction, state officials cannot do so when asserting claims on a class member’s behalf. See

Ed.; Baldwin-United, 770 F.2d at 341 (holding that “sovereign immunity is not a bar” to an

injunction that “only precludes state officials from bringing actions in a de facto or de jure

representative capacity on behalf of [privatej plaintiffs”).

Finally, even if the Eleventh Amendment were applicable here (and it is not), this Court

could enforce the injunction under the Ex parte Young doctrine that allows federal courts to

require state officials to conform their conduct to federal law. (See Mem. at 17 & n.9.) Contrary

to Baron & Budd’s assertion (B&B Opp. at 15), the Ex parte Young doctrine is not limited to

instances in which state officials violate the Constitution; it also applies when state officials

violate a pre-existing federal court injunction. (Mem. at 17 & n.9.)

C. Due Process Does Not Bar The Court From Enforcing The Injunction.

Baron & Budd next argues that applying the Court’s injunction to the state attorneys

general would deprive them of due process. (B&B Opp. at 15-16.) Even if Baron & Budd were

entitled to assert the due process interests of the attorneys general, however, its argument would

fail because the attorneys general have no due process rights at stake here. The Courts

injunction prohibits only the assertion of claims that seek recovery for class members; it does not

15

bar claims that seek recovery for states. Accordingly, the injunction did not deprive the states of

any property and does not implicate any due process rights the states might have. (Mem. 16-17.)

The only property interests at issue here are those of class members, all of whom have

received adequate due process protections during the notice and opt-out process. (See Dkt. #3 84,

¶ 10.) To the extent that state attorneys general seek to assert claims on behalf of these

settlement class members, they stand in privity with the class members and are deemed to have

received the same notice and opportunity to object to the settlement that the class members

received. See Mem. at 14-16; People ex rd. Spitzer v. Applied Card Sys., Inc., 894 N.E.2d 1, 13

(N.Y. 2008) (rejecting state attorney general’s argument that he “was not provided with notice of

the settlement” because he stood in privity with class members). For all these reasons, Baron &

Budd’s due process arguments should be rejected.

D. The Court That Enters An Injunction Has Jurisdiction To Enforce It.

Baron & Budd contends that Chase is required to enforce the injunction in the courts

where the state attorneys general filed their lawsuits (B&B Opp. at 17), but that is not the law. In

Alderwoods, the Eleventh Circuit concluded that “[ijt would wreak havoc on the federal courts to

leave enforcement of [an] injunctive order” issued by one court “to the interpretative whims of”

another. 682 F.3d at 970. Thus, “the court that issued the injunctive order alone possesses the

power to enforce compliance with and punish contempt of that order.” Id (emphasis added)

This Court therefore has the authority to issue an order requiring Respondents to appear and

show cause why they should not be held in contempt of the Court’s injunction.13

13 Baron & Budd relies on Kokkonen v. Guardian Life Ins. Co. ofAm.. 511 U.S. 375 (1994),but that case confirms that this Court may enforce the injunction. In Kokkonen, the SupremeCourt held that a district court may enforce a settlement agreement if it retains jurisdiction overthe agreement or incorporates the agreement into its final order of dismissal. 511 U.S. at 380-81.This Court unquestionably took both of those steps. (Dkt. #384, ¶J 1. 17).

16

Baron & Budd fares no better with its argument that federal courts cannot enjoin pre

existing state court proceedings in the course of enforcing a settlement agreement. (B&B Opp.

at 17-18.) Chase is not asking the Court to issue a new injunction that would interrupt the course

of a pre-existing state court proceeding; it is merely seeking to enforce an existing injunction that

issued before Respondents filed their lawsuits.’4 Federal courts have ample power to enforce

such injunctions. (Mem. 19-20.)

Baron & Budd’s reliance on Sandpiper Village Condominium Ass ‘n, Inc. v. Louisiana

PacfIc Corp., 428 F.3d 831(9th Cir. 2005), is therefore misplaced. In Sandpiper, the court held

that the Anti-Injunction Act bars federal courts from enjoining state court proceedings when “the

terms of the settlement were approved and finalized long before the district court issued the

injunction.” Id at 846. Here, by contrast, the Anti-Injunction Act does not apply because the

Court issued its injunction before Respondents filed their lawsuits. (Mem. at

IV. THE COURT SHOULD ENTER A SHOW CAUSE ORDER REQUIRINGRESPONDENTS TO APPEAR.

Golomb & Honik complains that Chase fails to specify the sanction that it seeks (G&H

Opp. at 4 n.2), but that argument rests on a misunderstanding of the show cause procedure. To

support a show cause order, Chase is merely required to “cite the injunctive provision at issue

and allege[J that the defendant refused to obey its mandate.” Alderwoods, 682 F.3d at 968 n.20

(internal quotations omitted) (emphasis added). So long as a court is “satisfied that the plaintiffs

Although Respondents filed the West Virginia action before the Court entered finalapproval of the settlement, the Court had already issued a preliminary injunction barringsettlement class members from re-asserting payment protection claims. (Dkt. #23, ¶ 28.)

Sandpiper is distinguishable for an additional reason. In Sandpiper, the court cabined itsholding to litigants who are not a party or in privity with a party to a prior federal action andwho assert] claims that were not resolved in the prior action.” 428 F.3d at 853. Here,Respondents are in privity with settlement class members to the extent they seek restitution forsuch class members. (See Mem. at 14-16.)

17

motion states a case of non-compliance,” the court should order the respondent “to show cause

why he should not be held in contempt and schedule[] a hearing for that purpose.” Id. (quoting

Reynolds v. Roberts, 207 F.3d 1288, 1298 (11th Cir. 2000)). Here, Chase’s motion adequately

alleges that Respondents have violated the Court’s injunction. The Court should therefore order

Respondents to appear and show cause why they should not be held in contempt. Of course, if

Respondents bring themselves into compliance with the injunction by the time of the show

causing hearing, there would be no need for contempt sanctions.

Respondents also argue that Chase has failed to provide “clear and convincing evidence”

that Respondents violated the Court’s injunction (B&B Opp. at 5; G&H Opp. at 4), but that

standard applies only to “whether in fact their conduct complied with the order at issue.”

Howard Johnson Co., Inc. v. Khimani, 892 F.2d 1512, 1516 (11th Cir. 1990); see also FTC v.

Leshin, 618 F.3d 1221, 1232 (11th Cir. 2010) (“The decisions of our Court and our predecessor

court have held that substantial, diligent, or good faith efforts are not enough; the only issue is

compliance.”). Because Respondents do not deny that they have filed lawsuits that seek

monetary relief payable to settlement class members, Chase has met the standard for issuance of

a show cause order.

CONCLUSION

For the foregoing reasons, Chase respectfully asks the Court to order Respondents to

show cause why they should not be held in contempt of this Court’s injunction.

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Dated: October 26, 2012 Respectfully submitted,

Robert D. Wick (admitted pro hac vice)Andrew Soukup (admitted pro hac vice)COVINGTON & BURLING LLPAttorneys for Defendants1201 Pennsylvania Ave. N.W.Washington, D.C. 20004Telephone: (202) 662-6000Facsimile: (202) 778-5487E-mail: rwickcov.comE-mail: isucv.c

Dennis M. CampbellCAMPBELL LAW FIRM, PLLCAttorney for Defendants95 Merrick Way, Suite 514Coral Gables, Florida 33134Telephone: (305) 444-6040Facsimile: (305) 444-6041E-mail: jcIlä)caelllarm.net

s/Dennis M. CampbellDennis M. CampbellFlorida Bar No. 271527

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CERTIFICATE OF SERViCE

I HEREBY CERTIFY that on this 26th day of October, 2012, 1 electronically filed

Chase’s Reply Memorandum In Support Of Its Motion For Show Cause Order using the ECF

system, which will send a notification of such filing to the counsel of record who have entered

appearances in this action. ln addition, I served a true and correct copy of Chase’s Reply

Memorandum In Support Of Its Motion For Show Cause Order via c-mail and first-class mail on

the following individuals:

Richard M. Golomb, Esq.Kenneth J. Grunfeld, Esq.GOLOMB & HONIK, P.C.1515 Market Street, Suite 1100Philadelphia, PA 19102E-mail: rgolombdgolombhonik.cemE-mail: kgrunfeld(dgolornbhonikcom

Laura Baughman, Esq.Thomas M. Sims, Esq.BARON & BUDD, P.C.3102 Oak Lawn Ave., Suite 1100Dallas, TX 75219E-mail: IbaughmanIbaronbudd.comE-mail:

J. Burton LeBlanc, IV, Esq.BARON & BUDD, P.C.9015 Bluebonnet BoulevardBaton Rouge, LA 70810E-mail: bleblanc(Zi;baronbuddcom

s/Dennis M. CampbellDennis M. Campbell